Compel is buying rival IT rental firm The Brewton Group (which trades as Hire IT) for £3m cash from its own resources.

For the year to 31 December 2004, Hire IT had rental revenues of £7.3m, operating profits of £300,000 and a loss before tax of £10,000 “after substantial interest payments to some of the owners of the business”.

The firm estimates merger costs of £500,000 and once that is out of the way for the deal to be earnings enhancing.

Compel also owns a big Oracle consultancy, called Compelsolve. The group currently turns over around £65m a year and employs 300 people. Once upon a time, it was one of the UK’s biggest IT product resellers, ranking third in behind Computacenter and SCC.

It was a consolidator in this business too, buying many smaller resellers across the country. But margin squeeze and falling sales in the post-Y2K fall-out put paid to its ambitions in commodity PC reselling. Compel fled the sector, flogging its by now lossmaking business to SCC in March 2001 for up to £18.5m. But they have been arguing over the price ever since over the deal.

Spats aside, Compel’s departure from IT hardware maybe wasn’t such a bad thing, the way sales have turned out lately, with Computacenter and Morse both issuing profit warnings in recent weeks. ®